Is the UK really in danger of quitting the European Union? Former Prime Minister Tony Blair thinks so, telling German newspaper Die Zeit he is "deeply worried"; investment bank Nomura this month published a lengthy analysis, warning its clients the risk is "non-negligible".
A UK exit scenario isn't hard to conjure. David Cameron's Conservative party is deeply eurosceptic: much of it believes he has squandered a golden opportunity during the euro crisis to renegotiate the terms of the UK's EU membership. As a result, Mr Cameron is under pressure to agree to promise a referendum in his party's next election manifesto, a promise his Liberal Democrat coalition partners and the Labour opposition may feel compelled to match. Unless Mr Cameron succeeded in repatriating sufficient powers from the EU to satisfy eurosceptic opinion, the UK might vote "out".
[Mr Cameron] won his party leadership by vowing to take the Tories out of the European People's Party, cutting his party adrift from the mainstream European centre-right. At a time when the UK has needed allies, he and his senior colleagues have antagonised other Member States with ill-judged advice on how to solve the euro crisis. Faced with an opportunity last December to wring concessions out of Brussels in return for supporting the eurozone Fiscal Pact, he opted to make highly technical, apparently innocuous but actually implausible demands relating to the City of London, including a veto over single market financial rules. His negotiating strategy looked like a ruse deliberately designed to fail, simply to avoid having to confront his party in parliament.
Of course, Mr Cameron's lack of strategy has strategic consequences. Faced with a UK veto on the treaty changes needed to embed the eurozone's emerging political union in existing European institutions, the eurozone is increasingly forced to create new arrangements—for example, on fiscal union and banking union—outside the European treaties where the UK has no voice, increasing the risk that Britain becomes marginalised within Europe.
Perhaps Mr Cameron secretly hopes the eurozone will ultimately fall apart, freeing him of the need to provide decisive leadership. But the lesson of the crisis so far is that the EU is good at forcing national leaders to face up to their responsibilities. Sooner or later, Mr Cameron is likely to have to lead a campaign for continued British EU membership on the basis of only limited change in the terms of that membership. He will almost certainly win. But he might as well start preparing the ground now.
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